MS Coast city in financial turmoil will raise taxes, and is facing IRS fines

The Pass Christian Board of Aldermen voted Monday to increase property taxes for the first time in over a decade, arguing it is the only escape from a deficit plaguing the city.

The move came as leaders scrambled to set a new budget amid recent financial turmoil. The city is nearly two years behind schedule on audits. And the Board voted this month to ask the State Auditor’s Office to investigate possible financial mismanagement in the city’s code, water and harbor departments.

Mayor Kenny Torgeson also disclosed on Monday that the city is facing fines from the Internal Revenue Service. City Clerk Marian Governor said the IRS has already fined Pass Christian $49,000 for failing to file tax forms in 2022. It is unclear how much the city will be fined in total, but leaders say they expect further penalties.

“We’re raising your taxes because we absolutely have to,” Alderman-at-Large Victor Pickich said.

The decision means locals who live in a $200,000 home will pay about $60 more a year in property taxes. Residents in $500,000 homes will pay about $150 more.

The estimates do not account for several tax exemptions, and people who own homes but do not live full-time in Pass Christian will pay slightly more.

Leaders expect the move to bring nearly $600,000 in revenue to the city.

Leaders call tax increase necessary

Aldermen have called it a difficult, but necessary, choice. Governor said the city ended 2024 in a nearly $900,000 deficit. Projections this year are unclear, and leaders hope they will come close to breaking even. But they want to keep enough money on hand to absorb more IRS fines and prepare for storms.

“If Katrina hits tomorrow, or anything hits tomorrow, we do not have the funds to pay the trash guys to come in, extra police protection, and everything else,” Alderman Barry Dreyfus said Monday night.

Torgeson and other city leaders have largely blamed former mayor Jimmy Rafferty’s administration for the financial problems. Torgeson, a longtime alderman-at-large who won the mayor’s seat this year, said the city was fined by the IRS because Rafferty’s administration did not complete all required tax filings. Governor, the city clerk, said bookkeeping issues led the Board to unknowingly adopt a budget last fiscal year with a deficit.

Rafferty was traveling on Tuesday and unavailable for comment. During his re-election campaign last spring, Rafferty said his administration brought in millions of grant dollars for projects at no cost to the city. He also noted the city finished significant infrastructure improvements under his leadership, and he pledged not to raise taxes.

“I will always work hard for Pass Christian, listen to your needs and concerns, and continue moving this great city in the right direction,” his campaign wrote on social media this year.

The city last raised property taxes in 2011. The new property tax rate will be among the highest of cities in Harrison County. It is also nearly double the rate in Bay St. Louis, according to the Mississippi Department of Revenue.

To save money, Board members are also planning to eliminate two city jobs: one in the senior citizens program and the other in community affairs. The city will likely use Harrison County’s senior citizens program instead. And leaders are expecting small increases to garbage and water fees, among other cost-saving measures.

Board members are also supporting a new special tax targeted at tourists that would require Legislative approval and could not start until next year.

The Board will adopt the budget Sept. 15 after a public hearing. The property tax increase would start in October.

This story was originally published August 19, 2025 at 1:21 PM.